Will deficit hysteria finally pave the way for a sensible Alberta sales tax? Ummm … don’t count on it

PHOTOS: Never mind the political stuff, this is the Heidelberg-Königstuhl State Observatory, where astronomer Max Wolf discovered the Minor Planet Climenhaga in 1917. Below, not in the order in which they appear: Alberta Finance Minister Joe Ceci, British Columbia Lieutenant-Governor Judith Guichon, B.C. New Democratic Party Leader John Horgan, and Professor Wolf himself.

Judging from the debt and deficit hysteria among the conservative contingent on social media and their mainstream media auxiliary yesterday afternoon in the aftermath of publication Alberta’s final audited figures for last year’s provincial budget, it almost feels as if they’re finally setting the stage for a provincial sales tax.

They focused on the report’s recording of a $10.8-billion deficit and $33.3-billion in debt, with the general tenor of the commentary emphasizing Finance Minister Joe Ceci’s grim mien at yesterday’s news conference and suggesting the numbers herald the end of civilization as we know it.

Of course, encouraging a sales tax is likely not the right’s intention, but if this keeps up, many of us would be happy to pay 5 per cent more for our goods and services just as Saskatchewan does if only to make that constant screeching go away.

Actually, some of us have concluded a sales tax is the only thing that will save Alberta if resource prices stay low, but apparently there’s an elite legislative consensus at the moment that it must not, cannot happen.

Still – who knows? – if the right’s electoral strategy continues unabated, Albertans may at last be persuaded the only way to save the place is to adopt a sales tax like pretty well every other jurisdiction on the planet.

Never mind that when the dust settles, even at present rates of spending with no bending of the cost curve, we’ll still have a lower debt-to-GDP ratio by far of any province in Canada, the economy is growing faster than anywhere else in the country, population continues to grow at a healthy pace, and oil prices throughout the year were a little higher than estimated. The Opposition, obviously, assumes economic literacy is not a strong suit among its core supporters.

But the big question is, with the Canada Day weekend looming tomorrow, will anyone other than the most politically engaged Twitterati even notice the brouhaha?

Perhaps not. That may be why back in 2011 the then-ruling Progressive Conservatives decided that right before the Canada Day weekend would be a fine time to release the final accounting of how the year’s budget actually turned out.

So it’s possible, just as Alberta’s Tory God intended, that all this weeping and gnashing of teeth may be for naught, with everybody concentrating on beer, burgers and sunshine.

Civilization also ends in British Columbia – sorry about that, Christy Clark

Meanwhile, over the Rockies, despite the earnest machinations of Premier Christy Clark, the NDP-Green (non) coalition voted non-confidence in the province’s “Liberal” government yesterday, so Lieutenant-Governor Judith Guichon had the unusual experience for a Canadian vice-regal personage of actually having to do her job.

An L-G’s job – other than parading around in an archaic looking uniform on occasions of state – is mainly to decide what happens on those exceedingly rare occasions when a minority government loses the confidence of its Legislature.

Ms. Guichon had the choice of doing the right thing and asking Opposition Leader John Horgan, a New Democrat, to form a government – seeing as in the circumstances that prevail in B.C. there’s a reasonable chance Mr. Horgan’s agreement with the provincial Green Party could hold together.

Or she could have done the wrong thing and abused B.C. taxpayers to give Ms. Clark one more kick at the electoral can by calling another election.

In the event, late yesterday, she did the right thing, and Mr. Horgan will get the chance to be premier of British Columbia

It’s International Asteroid Day, a personal favourite of your blogger

Finally, thanks to the good officers of the United Nations, today is International Asteroid Day, which exists to promote awareness of asteroids and the possibility a big one may one of these days smack into the earth.

Not much we can do about that, it seems to me, but it’s something to think about if you find the size of Alberta’s debt not to be apocalyptic enough for your tastes.

Personally, I am very pleased about the world’s recognition of the band of rocky debris orbiting the sun, mostly way out there between Mars and Jupiter, because I am one of the few people you will ever meet who shares a name with a large asteroid.

I refer, of course, to Minor Planet 3034, Climenhaga, discovered 100 years ago this Sept. 24 by Maximilian Franz Joseph Cornelius Wolf at the Heidelberg-Königstuhl State Observatory in what at the time did not seem like a particularly auspicious year for German-Canadian relations. I am not making this up.

20 Comments to: Will deficit hysteria finally pave the way for a sensible Alberta sales tax? Ummm … don’t count on it

David

June 30th, 2017

I don’t see any party seriously proposing a sales tax in the next few years. I think its because they expect the public reaction would be very negative. We can look back to what happened to the Federal PC’s after they introduced the GST, they were almost annihilated. I don’t think Albertans will to give up their long held PST free status easily or happily.

However, I am sure the size of the deficit will continue to cause some concern for many Albertans over the next few years. Although, this concern could dissipate somewhat if the economy improves and the deficit starts to go down considerably.

At various times In the past, Albertans have been fortunate to have enough oil revenues to allow the government to maintain reasonable services and fairly low taxes. While I think there will be a gradual recovery in oil prices, I am not sure if they will recover enough or very quickly this time. Eventually we may need to start thinking beyond that past model, but of course not until we pray long and hard for another boom and once again promise not to p**s it away.

pogo

June 30th, 2017

Happy Canada day you mugs! Minor planet Climenhaga is right! You will have the lowest debt to GDP, the lowest tax regime for private citizens, small businesses, and corporations plus no sales tax and likely the highest growth rate in Canada despite the pathetic oil price. Ask yourselves, why does BC have nearing 70 billion dollars in debt and still sport a AAA credit rating? Why does Saskatchewan have the greatest (C)onservative leader in the known universe during modern times and not only have more debt to GDP along with a poorer prospect for growth and get downgraded twice? They both have sales taxes and higher costs for small and large business. What’s the difference? Well my contention is that in BC the ratings agencies will pounce soon, because the only thing worse than the NDP is the Greens! Where Sask is concerned I think it’s just that poor little Brad is running a teeny tiny little fifedom that is now more valuable as a shorting opportunity. Sucks to be an under boss in the hinterland of the free market miracles machinery! Anyhoo, always remember my paraphrase of what Mike Meyers said: It’s not that Canada is perfect, it’s that we just keep trying to be! Happy Canada you old farts! https://youtu.be/NjoU1Qkeizs

David Climenhaga

July 1st, 2017

Pogo, I’ve looked at the RBC financial tables and I’m sorry to report I believe you have overestimated B.C.’s debt. I would be delighted to be corrected on this, however, so feel free to make your case. Loved the song, but then, I always did. DJC

David Climenhaga

jerrymacgp

June 30th, 2017

Apparently, the BC L-G set some sort of constitutional precedent in refusing Ms Clarke’s advise to dissolve the legislature, and instead summoned Mr Horgan to Government House and invited him to try and form a government. The last vice-regal figure to do that was one Viscount Byng of Vimy, who refused to grant dissolution to W L Mackenzie King in the 1930s, and instead invited Arthur Meighen of the Conservatives to try and form a government. That government soon fell, and in the election that resulted King campaigned hard on the notion that a British peer ought not to be able to refuse the advice of a Canadian PM. This what came to be known as the King-Byng affair.

Many political writers have since claimed that this meant that the GG or L-G has no discretion in such cases, but since all of our Governors-General and Lieutenant-Governors are now “made-in-Canada” (excepting the recent Michaelle Jean, who was still not a Brit) perhaps that principle no longer applies. I wonder what might have happened to Mr Harper’s prorogation request a few years ago had Ms Jean had this example to consider …

Farmer B

July 1st, 2017

What I find fascinatingly amusing is that anybody believes that the Alberta NDP can balance the budget by 2023 without more tax increases. Joe Ceci would try and have us believe that by bending the cost curve or by essentially increasing spending at a slower rate than the previous PC government he can balance the budget. The PC’s couldn’t balance the budget with $100 oil and they were spending less than the NDP. The only way the NDP will magically balance the budget by 2023 is to bring in a sales tax after the next election, one we won’t get to vote on or even be told is coming just like the carbon tax. As for your debt to GDP arguement, let’s look at it a different way. By the end of the fourth budget period which will be March 31, 2019 the a Alberta NDP will have accumulated roughly 60 billion dollars of debt in 4 years or roughly $14520 for every resident of Alberta. Ontario, the most indebted non- sovereign government entity in the world is just over 300 billion in debt or $21455 for every resident of Ontario. At this rate we will reach the per capita debt of todays Ontario by March of 2021. That is quite an accomplishment. And I thought the Ontario Liberal’s were financially incompetent.

As for John Horgan and Andrew Weaver, they come across to me as a pair of power hungry fools. I wish the residents of BC good luck!

Kang the barbarian

July 1st, 2017

Some modest corporate tax increases, say back to the level St. Ralph charged, along with some bending of the curve should avoid too much pain and allow the government to continue providing services to a young and growing population.

Farmer B

July 2nd, 2017

Kang if you look at Alberta’s 2017-2018 budget the projected revenue from corporate taxes is 3.9 billion dollars. The deficit for that same period when you include capital spending is roughly 15 billion dollars. Are you proposing closing that 11 billion dollar gap with a corporate tax increase? Norway, the often used shining example of successful socialism has a sales tax of 25% and a corporate tax rate of 24%. In Canada when you combine the provincial and federal rate we are already at 27%. I believe in Alberta it is projected that for each 1% of a sales tax it would generate roughly 1 billion dollars of revenue. A 5% sales tax would generate more revenue than is being generated by corporate taxes now. Kang can you show me how you would raise enough revenue through corporate tax increases.

Bill gates has suggested a robot tax. When you think about it this makes a lot of sense. Many governments are legislating higher and higher minimum wages. Think about the reduction in government revenue as tax paying employees are replaced by robots. I think if you are going to make it more attractive for a company to replace employees with automation because you have legislated a steep increase to minimum wage you need to make it less attractive by making that company contribute a similar amount of tax for each robot.

Kang the barbarian

July 2nd, 2017

Yes, corporate (& robot) taxation would be the best route for two reasons: one is that corporations are where all the money is. Secondly, it will give the corps a real incentive to avoid paying the tax by hiring people and investing in plant and equipment (robots mostly) – making the economy more efficient and generating extra tax revenue.

What we are talking about is not an $11 billion deficit; we are talking about just the operating costs deficit. The capital costs are something borrowed from savers, just as you no doubt borrow for similar capital expenditures like combines and tractors. It is a good time to be borrowing money given the very low interest rates. The big difference is that when government borrows from savers and pays them interest, every April they reach into the pockets of those people and take 30% of that investment income back as income tax.

Gail

July 1st, 2017

Usually I agree with you but on this I’m very surprised you’d endorse a sales tax given that it’s a regressive tax that hurts low income people. A greater portion of income is spent on tax when the income is smaller.

Increased corporate incomes or a better and more graduated personal income tax system are both ways that would improve government revenues without unfairly penalizing those who are low income.

The Manitoba NDP raised the provincial sales tax before the last election there and it was one of the big reasons they lost that election. I would hate to see the Alberta NDP put in a sales tax and risk the next election victory on it.

Athabascan

There is nothing regressive about a sales tax (a.k.a. consumption tax). it is by far the most egalitarian form of taxation ever devised.

Right-wingers call all taxes regressive – nothing new there. The reality is they don’t like it because it taxes the rich in a fair way.

Why shouldn’t a rich fuck who can afford a $100,000+ Range Rover pay more in sales tax, than a person who can only afford a Honda Civic. This seems perfectly fair to me.

The more you buy, because you are rich enough to buy shit, then the more you can afford to pitch in and pay your share. As for the poor, they are easily accommodated in a sales tax regime. Many jurisdictions exempt food and children’s’ clothing.

anon

July 1st, 2017

ah, the politics of envy. Almost all the money in the economy is being taken by the corporations and squirreled away in sterile speculation. Raising the corporate income tax would give them an incentive to invest in new plant and equipment as well as giving the government revenue.

Val

July 1st, 2017

“it is by far the most egalitarian form of taxation ever devised.”
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that’s load of BS, typical to ones, who usually repeats quotes from someone well promoted by the system..
it would become egalitarian tax only on condition that consumption tax was graduated on the scale of value vs. necessity . till then it is remains a tax to punish ones who being born into poverty. and that’s more harsh punishment for those who’s more vulnerable.

Val

July 2nd, 2017

It is an indisputable fact that under a sales tax regime, those who buy more stuff, end up paying more sales tax in absolute terms.
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undisputed by whom?
there are circumstances, when $5000 tax on single purchase slips without being even noticed and when $5 tax, leaving you without meal for day or two.
and those, to whom $5 matters, way overwhelming.
same apply pretty much in regard of your argument ” affluent people buys more”.
they buy more what exactly?
daily, nationwide how many transactions for goods/services worth $100K and up and how many transactions for tooth brush, cup of coffee. etc?
don’t even wanna talk about traditional for many “affluent” reclamation back of consumption tax by any possible way.

Farmer B

July 3rd, 2017

Val what would your solution be to fix Alberta’s revenue or spending problem depending on your political outlook? It is obvious you don’t agree with a sales tax. Albertan’s have always been fortunate that energy royalties have allowed successive governments to spend beyond their means. I do believe in the long run the price of oil will be higher than now but it still won’t provide enough revenue for spend happy government.

Val

July 4th, 2017

beside fiscal activities government may participate in productive, value added activities to generate extra cash inflow. there they will have much more advanced options than that any private investor. for that needs only to got guts to step over taboo, established in the 80s by followers of Margaret Thatcher. 30+ years does show ineffectiveness exclusively dominant role in economy by private capital.